Culture

Travel

Milestones

Overview

Fraud

Financial Pathways

Take a new approach to managing credit, savings and making smarter financial choices with expert advice from Life and Money by Citi.

Money

Well-being

Credit Cards

Banking

Lending

Investing

Citigold®

Citi Financial Pathways

Around the world, Citi has strategic locations where our employees go to work each day to support our core businesses and drive solutions for our clients. 

Products and Services

NavBar

Home

FooterNav

<p>Shopping wisely and making smart spending decisions isn't exactly easy in the best of times, and during times of inflation, it's particularly challenging. But regardless of the economic climate you're in, finding ways to save for your retirement is always worthwhile — it may just take some behavior-shifting.</p><p>Right now, signs are pointing to economic recovery. Inflation, the term that describes the increase of goods and prices rising all at once, is currently hovering around 4%, according to the U.S. Bureau of Labor Statistics — it's eased considerably since the summer of 2022 when it peaked at 9.1%, though rents and mortgages are still relatively high. <a name="_Hlk139981363"></a></p><p>If you're struggling with recent price hikes, you may be tempted to cut back contributions to your 401(k) or to stop putting money into your retirement altogether, but that may not be the best idea. After all, saving less may just make money tighter when you really need that retirement fund. Whether you're feeling overwhelmed by rising costs or have already adjusted, here are some money moves you can make today to keep working toward your retirement goals tomorrow.</p><h2>Improve your cash communication</h2><p>If you're managing money carefully, that's great, but you're at a disadvantage if your spouse or partner isn't doing the same. (You may start to feel as though you're bailing water out of the boat, and your companion is scooping it back in.) If you have teenage kids or other household members spending money, be sure to loop them in, too. It's a good way to help teach them smart habits for them down the line. You can do this in a variety of ways:</p><ul><li>Make a point of having regular (daily, weekly or monthly) semi-formal conversations about your biggest expenses and the things your family needs to save up for, such as college tuition, vacations or home improvements.</li><li>Create a shared family budget document that you all can access.</li><li>Come up with budget "challenges," for the family, such as a no-spend week, and maybe even offer small cash prizes or gift cards for the family member who saves the most or spends the least.</li></ul><p>This type of group clarity is motivating. "In my experience, the most common mistake people make when saving money is not setting clear goals," says Mario J. Payne, a certified financial planner and financial advisor and founder of TOAMS Financial in Jacksonville, Fl. "Whether it's for retirement, a down payment on a house or an emergency fund, having a specific goal gives your saving efforts direction and purpose," he adds. "It makes the process more rewarding and helps you stay disciplined, even when faced with tempting spending opportunities."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/smarter_spending_body-2_1347491040.jpg" alt="A woman adds change to a glass jar" class="right_image" /><h2>Buckle down and budget</h2><p>We often groan at the word budget as though it's a sign we're not doing well financially. But <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/how-to-create-a-budget">creating one</a> is actually proof that you're aggressively trying to grow your wealth. You can budget in a number of different ways, but here are a few popular strategies:</p><ul><li>The 50/30/20 budget. With this approach, also known as a "pay yourself budget," you put 50% of your income toward needs, 30% toward wants and 20% toward savings and debt. "It's a classic strategy that still surprises me with how underutilized it is," says Payne. "The idea is to treat your savings like any other bill. It should be a non-negotiable part of your budget."</li><li>Cash jar or envelope system. This method can be tricky to pull off in a digital age, but the idea is that you put your money for each expense into one envelope or jar so you don't inadvertently spend cash allotted for, say, your utility bill or the beach getaway you're planning.</li><li>Zero-sum budget. With this strategy, whatever is left over after you pay your monthly expenses either gets invested, goes toward paying off debt or is moved into an emergency fund.</li></ul><p>Whichever style of budget you choose, it's bound to be helpful. Whenever you systematically keep track of how much you're spending, you're more likely to notice patterns that can help you figure out where to cut back, such as repeat services or monthly subscriptions you rarely use. Budgets also are more likely to work when they<a href="https://www.lifeandmoney.citi.com/lam/articles/money/savings/saving-money-hacks"> fit your personality</a>. If you are somebody who worries about falling short on expenses, a cash jar or envelope system may be perfect for you. If you're more of a big-picture person, the 50/30/20 budget may be your thing.</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/smarter_spending_body-1_1467917312.jpg" alt="A woman compares the price of clothing items in a store" class="right_image" /><h2>Get smarter about spending</h2><p>In the time-crunched world we're living in, it's not always easy to be mindful about where our money is going, and retailers often take advantage of that, says Trae Bodge, a New York City-based shopping consultant who runs the blog TrueTrae.com.</p><p>Impulse shopping is one of the biggest issues when it comes to wasting money, Bodge says, adding, "Retailers are very good at enticing us to shop and creating a sense of urgency, so I always encourage shoppers to take a beat before clicking 'buy' or checking out."</p><p>Comparing prices and searching for coupons are always smart steps before purchasing, and beyond that, these small moves can have a big, bottom-line impact:</p><ul><li>Join a warehouse club. These programs often entail upfront membership fees, but if you do a lot of shopping, buying in bulk can save you money in the long run. Plus, warehouse clubs frequently offer deals on travel, tires, gasoline, hearing aids, eyeglasses and appliances too.</li><li>Join a "<a href="https://www.lifeandmoney.citi.com/lam/articles/culture/eco-friendly/How-you-can-become-more-sustainable-in-your-everyday-life">Buy Nothing</a>" club. There are outposts of these all around the world, and the concept is that you can ask for anything and give away anything you want, so it can be a great source of gently used furniture and household goods especially. And it's not only altruistic but also sustainable — it's more environmentally friendly to give things away than throw them away.</li><li>Seek out cheaper alternatives. If you haven't changed the plan or provider for your electric utility, cell phone service or insurance in a long time, it can be worth researching whether there are less expensive options you can switch to. A number of websites can do the rate comparisons for you, but you might also want to call your cable provider, for example, to ask if they can come down on the price.</li><li>Optimize your credit card benefits. That is, don't forget to use the rewards you earn. It's widely known that many credit cards offer points when you shop in certain categories, and in addition, says Bodge, "credit card carriers often have exclusive arrangements with select retailers," which means you can save more by shopping there with that card. If you're going to really get the most out of your card or cards, it's important to pay attention to notifications from your card provider and regularly check the site. Rewards change periodically, he says, "and card issuers will sometimes raise their rewards for a limited time period."</li></ul><h2>Level-up your income</h2><p>The best way to enhance your earnings is to ask for a raise, of course. But if that isn't feasible in your current financial state, you can still consider other lucrative options like taking on a part-time side gig, holding a yard sale, selling clothing or furniture through online consignment shops, or doing something a little more out-of-the-box. You could rent out storage space in your home, for example, or if you have a talent other people wish they had, such as being a piano player or an excellent gardener, turn that into a part-time business by teaching students one-on-one or by through workshops at a community center.</p><p>These options may not be practical for everyone, but in general, looking beyond your current income stream for additional sources can be a fruitful exercise to keep funding your savings and retirement accounts. "Saving money is less about the amount and more about developing the right habits and strategies," Payne says, and while adopting these early gives you a bigger savings runway, "it's never too late to start."</p><p>You're also hedging your bets in a sense. If inflation rises again, you'll be relieved you've already improved your spending and saving habits. And if it continues to ease up, there really isn't a downside; you'll just have more money in your checking account.</p>

How to Spend and Save Smarter in Any Economic Climate

<p>The number of Americans who own stocks is on the rise, but the decision to invest your money is personal, and there's not always a clear answer. That's why it's helpful to look at the facts. </p><p>In an April 2023 Gallup poll, 61% of U.S. adults said they own stocks — an increase from 56% in 2021 (and the highest rate since 2008.) Even so, not everyone is active in the market. For some people, it may be because they don't feel they fit the "mold" of a typical investor or are swayed by other misconceptions.</p><p>To help you figure out if investing is right for you, we're sharing six common myths, plus advice on how to move past them.</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/Business-woman-using-cellphone-in-office.jpg" alt="Business woman using cellphone in office" class="right_image" /><h2 style="margin-bottom: 11px;">1. Myth: Getting started is difficult.</h2><p>Many people think they need access to a top advisor to oversee their investments, but the rise of mobile trading apps and robo-advisory services have made managing a portfolio easier than ever.</p><p>"Many of today's apps offer clean and easy-to-use interfaces and various useful functionalities, and most importantly, they're free," says Tyrone Ross, who operates a San Diego-based financial consultancy called 401 Financial. "My clients use them for everything from monitoring their investments to tracking and budgeting."</p><h2>2. Myth: Investing is too expensive.</h2><p>Think you need a lot of money just to open a trading account? Or that the best-performing investments cater to the top 1%? Neither are true. Brokerages have tamped down fees and minimum account balances in recent years, allowing people to invest with a few hundred dollars.</p><p>Not all funds are expensive either. While some mutual funds — a basket of securities run by an experienced portfolio manager — charge 1% to 2% in fees, you don't have to look far to find inexpensive and efficient options. Exchange-traded funds (ETFs), for instance, deliver transparency, flexibility and tax efficiency at a fraction of the cost of actively managed funds. (Keep in mind that asset allocation and diversification do not guarantee a profit or protect against loss.)</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/new-to-investing_body-2_1151155735.jpg" alt="A woman makes calculations while reviewing her finances" class="right_image" /><h2 style="margin-bottom: 11px;">3. Myth: Investing requires a complex strategy.</h2><p>There may be a perception that only expert investors are successful, but what many people forget is that passive investments — those that track an index or an industry sector — have actually beaten out some actively managed funds over the past decade. That means that a complex strategy isn't necessarily going to outperform a basic approach.</p><p>Keep in mind, though, that investing is much more than just picking stocks. You'll want to think about how to diversify, manage risks and distribute your assets.</p><h2>4. Myth: Only practice makes perfect.</h2><p>You may know people who spend their weekend poring over financial statements and running spreadsheet models, but the truth is, that's not necessarily the key to investing wisely.</p><p>What you need is a <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/save-money-with-a-financial-checkup">financial plan</a>. Working with a financial advisor can help you establish appropriate <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/super-money-saving-tips">savings goals</a>, develop a <a href="https://www.lifeandmoney.citi.com/lam/articles/milestones/retirement/the-new-retirement">retirement strategy</a> and create a <a href="https://www.lifeandmoney.citi.com/lam/articles/money/family/personal-financial-planning-for-families">long-term investment plan</a>. An advisor will develop an intimate knowledge of your finances and can then recommend assets to help you reach your long-term goals.</p><p>"I like to start with the three Es: exposure, education and empowerment," says Ross. "A lot of times people just don't know what's available, how to get started and where to turn at major life milestones."</p><h2 style="margin-bottom: 11px;">5. Myth: The market is a rollercoaster.</h2><p>When major stock market indexes hit a rough patch, it's natural to think that the next big recession is around the corner. You might recall past downturns when markets contracted, unemployment rose and the economy appeared shaky.</p><p>Yet regular corrections can be healthy, and history has shown the market has moved higher more often than not. (Of course, past performance is not an indicator or any assurance of future growth, and because the market can be volatile, there are always financial risks to investing.)</p><p>If you maintain a long-term outlook, you may be more likely to enjoy the growth that the market can provide over time with much less stress. One way to do that is with a systematic approach like dollar cost averaging, which entails investing a fixed amount each week, month or quarter.</p><h2>6. Myth: Investing is a moral minefield.</h2><p>If you're wary of where your money will be going, consider that many publicly traded companies prioritize creating long-term value for shareholders while making a difference in the community. You can check both these boxes with an investment in an ESG fund or company, for example.</p><p>Look for companies that incorporate environmental, social responsibility and governance policies from the C-suite down to first-year analysts, or simply search for a list of Certified B Corporations, which balance purpose and profit.</p><p><em>— With additional reporting from Life and Money by Citi editors.</em></p>

 Investing is a great way to put your money to work. Here's how to get started.

New to Investing? Don't Let These 6 Myths Stop You

<p>The impact of our investments has the power to make big changes.</p><p>Not only can thoughtful investing completely transform your financial trajectory, but it can also help you make strides toward building a future that you believe in.</p><p>With socially responsible investing, you can choose to stake and support companies with missions meaningful to you. Instead of putting your money into companies that don't align with your values, socially responsible investing guides you to build — or diversify — your portfolio in ways that conform to your beliefs.</p><p>As the world continues to change around us, more people are becoming aware of socially responsible investment options. According to the 2018 Global Sustainable Investment Alliance Report, assets managed with sustainable investing strategies now represent 26% of all investment assets under professional management in the United States. If you are passionate about using (and potentially growing) your money to further causes and business practices that you care about, then socially responsible investing could be a great approach to incorporate into your financial strategy.</p><p>Let's dive into the concept of socially responsible investing, including how to assess if companies are socially responsible and how you can apply it to your financial future.</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/Close up of a mans hand holding fresh tea leaves.jpg" alt="Close up of a man's hand holding fresh tea leaves" class="right_image" /><h2>What is socially responsible investing?</h2><p>Socially responsible investing looks beyond the numbers behind a company to also focus on and consider the value of its societal impact, as evidenced by environmental, social and governance (ESG) criteria. While traditional investing can benefit your long-term financial well-being, socially responsible investing can help you reach money goals as well as further connect you to industries and businesses committed to benefiting society.</p><p>As an investor, you'll have the ability to work toward changes that you believe in. For instance, you'll be able to use your voice and power as an investor to shape the future of a company through shareholder voting and participate in the company's potential success that may include dividends.</p><h2>What are the advantages of thinking like a socially conscious investor?</h2><p>Thinking like a socially conscious investor can help you uncover environmental, social and governance (ESG) issues that you might otherwise not have considered as a traditional investor. This way of thinking ensures you stay aligned with your values, putting positive social impact ahead of profits. It can also save your portfolio from potential long-term losses as a result of leveraging ESG criteria in your risk assessment.</p><p>"Socially responsible investing represents a unique way to ensure more thorough risk analysis for investments, while at the same time ensuring that sustainable business practices withstand the test of time," says Jenny Coombs, associate professor at The College for Financial Planning, CSRIC® and the founder of GradMoney, an investing education platform.</p><p>Coombs goes on to add that, "Looking at investments through a sustainable lens means picking up on risk factors that might be overlooked using traditional financial analysis. For example, an investor with exposure to beachfront property investments in Miami might have a profitable portfolio today, but the increased frequency and severity of hurricanes and tropical storms is a risk factor that would be uncovered using environmental, social and governance (ESG) criteria."</p><p>Essentially, if this beachfront property was built without taking its surrounding ecosystems into consideration or without climate resilience features, over the long term it could be a loss for your portfolio in addition to being impactful to the environment.</p><h3>Community benefit</h3><p>With community-focused investments, where your investments go towards creating opportunities for disadvantaged demographics, you can have a big impact on a local economy. The Minority Business Development Agency reports there are nearly 11 million minority-owned businesses employing more than 6.3 million people in the United States. Through community-based investing, you have the ability to create more opportunities in areas that matter to you.</p><h3><a name="_heading=h.kv1vr09f16xf"></a>Access to capital</h3><p>Microfinancing provides capital to small businesses and individuals who lack access to the necessary funds needed to grow their businesses. Although these loans are usually of a relatively small dollar amount, they can have a very big impact on the financially marginalized. In fact, many tout the abilities of microfinancing as a way to lift women and families out of a cycle of poverty.</p><h3><a name="_heading=h.vmbbt86o7b2"></a></h3><h3>Sustainability</h3><p>The Earth has a finite quantity of natural resources that are needed to support humans around the globe. Without a sustainable approach to the consumption of these resources, the balance of ecosystems around the world can go off the rails. Not only could that have devastating impacts on the environment, but the economy could suffer in the long term. With that in mind, an environmentally conscious investor would choose to invest in companies committed to an <a href="https://www.lifeandmoney.citi.com/lam/articles/well-being/environment/low-waste-living-going-zero-waste">environmentally sustainable business model</a>. That might include looking at the way the company uses natural resources or how it fuels its operations and its treatment of animals.</p><h3><a name="_heading=h.68yx7hdur00b"></a>Governance</h3><p>When you consider the governance criteria of a company, you are evaluating whether or not you agree with the way that the company is run. With that, you might run into a variety of ethical issues. Examples might include the fairness of the payment structure or the accountability methods within the company.</p><p>According to Adeola Omole, an independent investor and wealth coach, "I would much rather invest in ethical companies that set a higher bar for themselves and their stakeholders, versus investing in a company that is behaving poorly and is willing to cut corners." She also adds, "For me, investing extends far beyond just purchasing a stock in a company, but also includes investing in companies that are good stewards of the environment, and that treat their employees and stakeholders well."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/Frameless solar panels battery energy storage facility.jpg" alt="Frameless solar panels, battery energy storage facility, wind turbines and big city with skyscrapers" class="right_image" /><h2>What should I look for in companies when investing?</h2><p>As you plan out your <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/how-to-set-up-a-values-based-financial-plan">values-based budget</a> and look for companies to invest your money in, it is important to follow your own set of values. But it can be helpful to look for well-known markers that will indicate a company's socially mindful bona fides.</p><p>Let's take a closer look at some of the certifications that can help you spot socially responsible companies.<a name="_heading=h.bg3gnwq5q81o"></a></p><h3>B Corp</h3><p>When a company has obtained a B Corp certification (the "B" stands for benefit), it has proven that it's serious about tackling society's biggest issues. Typically, these businesses are working to reduce inequality, protect the environment and build stronger communities. Not only are the products and services offered by theses business evaluated, but so are their internal operations.</p><h3><a name="_heading=h.dd9zcq1ntgcb"></a>Fair Trade</h3><p>When a company provides Fair Trade products, it is supporting efforts that protect the environment and empower farmers. The seal is only granted to products that are able to meet high social, environmental and economic standards. If a company spends the time and energy to make products that meet this high level of social responsibility, then you might feel more comfortable investing in its mission.</p><h3><a name="_heading=h.kq6sgdtgrk23"></a>Energy Star</h3><p>The Energy Star symbol is a government-backed certification that shows a product or building has been designed to be very energy efficient. With that, the company behind them is making an effort to protect the environment. Since the goal of the Energy Star certification is to reduce greenhouse gas emissions and other pollutants, companies that are making the effort to meet these standards are moving toward reaching those goals.</p><h3><a name="_heading=h.xv8lfhbdlyk1"></a>FSC</h3><p>Forest Stewardship Council (FSC) certification shows that a product has been sourced from a responsibly managed forest. By using this certification, companies show a commitment to conservation efforts.</p><h3><a name="_heading=h.l9ltc3e13jc8"></a>Rainforest Alliance Certified</h3><p>In a similar vein, Rainforest Alliance Certified products are sourced from a farm or forest which meets standards that require meaningful steps toward long-term environmental, social and economic sustainability. Not only does the certification symbolize a balanced approach to conservation and managing the ecosystem, but also an effort to improve rural livelihoods and human rights of rural people.</p><h2>How to invest in a socially responsible way</h2><p>Ready to begin? Here are three key steps to consider as you get started.</p><h3><a name="_heading=h.ih60t1vlsz1v"></a>1. Think about your criteria ahead of time</h3><p>As you start to map out your socially responsible investment portfolio, take some time to think about what you want to achieve with your investments. It might help to create a list of goals that you are looking for companies to support. Maybe you want your funds to help create opportunities in your community. Maybe you want to work with companies that are treating the environment like a top priority. And, of course, you want your funds to grow over time. There is no right or wrong way to build a socially responsible investment portfolio. But without a thoughtful approach, researching your options can be overwhelming.</p><h3><a name="_heading=h.lysgmg3jwg3b"></a>2. Consider mutual funds</h3><p>Mutual funds are a useful way to invest because you'll have the opportunity to access the profitability of a range of companies. That can help to distribute your investment across multiple companies instead of putting all of your eggs into one basket. Luckily, many investment platforms are now offering socially responsible mutual funds. But before you blindly invest in a mutual fund that is billed as "socially responsible," make sure to do your homework. Otherwise, you might find yourself invested in companies that you don't want to support.</p><h3><a name="_heading=h.2mr0zy25gf4j"></a>3. Research individual companies</h3><p>It is completely possible to gather the basic financials of a company from the U.S. Securities and Exchange Commission (SEC) to figure where a company spends its money. Additionally, you can read their story and fact check it when possible. Don't simply accept the story of a company at face value, dig a little bit deeper to make sure that nothing shady is going on.</p><p>Although researching individual companies can be more time-consuming, it is the best way to ensure that your investments are furthering values that you care about. A time-efficient research approach is to look at basic markers first. For example, you could start by only considering investments with Certified B Corps or monitor a company's environmental impact.</p><p>"Your portfolio should reflect investments in organizations or causes that you believe in, such as avoiding companies that derive much of their profits from fossil fuels or investing in companies that support and implement strong diversity initiatives." advises Coombs. "There are also mutual funds and ETFs (exchange-traded fund) that offer a way to gain exposure to sustainable investments with minimal effort, just be sure to read up on the fund initiatives in the prospectus to make sure they are in fact seeking sustainable investments," she adds.</p><h2>Is socially responsible investing economically viable?</h2><p>Socially responsible investing might sound like a dream come true. After all, you'll have the opportunity to support causes that you care about while building an investment portfolio designed to meet your long-term financial goals. You might be wondering if it is actually possible to balance economic viability with social responsibility.</p><p>Although it may take more effort to build a profitable investment portfolio with your social responsibilities in mind, it could be worth it in the long term. You'll be building a portfolio with the potential to sustain yourself while making the world a better place.</p>

You Can Build a Portfolio You Love and Invest Responsibly

<p style="margin-bottom:11px">An investment strategy that entails setting up payments to be routinely withdrawn from your checking account might sound like a questionable way to make money, but it's actually a fairly straightforward financial strategy for creating wealth, and one that doesn't depend on a lot of luck or magic. Here's how it works.</p><p style="margin-bottom:11px">With automatic investing, you're continually putting money away for your retirement or other goals with certain amounts rather than every once in a while. Technology does the heavy lifting here so you aren't the one making daily decisions. One way is to invest a certain sum in one or many investments that do not change. Another way is to use a robo advisor to monitor and periodically rebalance your investments in line with your risk tolerance, investment goals and time horizon.</p><p style="margin-bottom:11px">Historically speaking, over time — not a few years, and certainly not a few months — the stock market indexes have increased in value (though past performance is no guarantee of future results). That's why an automated investment program can be so valuable: Investors can be distracted by whatever's going on in their lives and sometimes make financial choices powered by emotions, but with automatic investment programs, a person continues to invest. </p><p>"It's all about dollar-cost averaging, an investment strategy in which you invest the same amount of money at regular intervals," says Andre Jean-Pierre, a financial advisor and founder of Aces Advisors, LLC, in New York City. "This ensures you buy more shares when prices are low and fewer when prices are high. As a result, you sidestep the risk of making a sizeable investment when the market hits a sour note."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/systematic-investing_body-1_1419556699.jpg" alt="A young woman uses her laptop to adjust her investments" class="right_image" /><h2 style="margin-bottom: 11px;">When can you use automatic investing?</h2><p>Often, when people talk about automatic investing, they're referring to investing through mutual funds or an employer-sponsored retirement plan, such as a 401(k). The way it works: You decide what amount or percentage of your income you want to contribute, and then those funds are taken from each paycheck and diverted into your retirement accounts.</p><p>How much should you contribute? Most professionals recommend putting away 10% to 15% of your pre-tax income toward your retirement. If that feels unrealistic for you, start with a smaller amount, whether that's 5% or 3% or 1%. One percent of your paycheck earmarked for retirement may sound like not enough to successfully fund your future, and it probably isn't, but it's far better than 0%, and if you can add another 1% every year, eventually you'd get to a good place.</p><p>"No two households are the same," says Rui Yao, a professor in the Personal Financial Planning department at the University of Missouri and a CFP<sup> ®</sup>. "How much to save out of your current income requires a careful plan." For instance, if you're carrying a lot of high-interest debt, she says, you'd want to focus on paying that off rather than trying to put 10% of your income toward retirement. Meanwhile, if your employer matches contributions to your 401(k) plan, it's a good idea to contribute enough to get the maximum match that your employer offers if you're able to swing it, she adds. "You can't get the maximum employer's match and at the same time, default on the mortgage or rent," Yao says, but if it's doable for you, "an employer's match is free money on the table — take it."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-1151007843_web.jpg" alt="Retired man using smartphone while sitting with dog in room at home" class="right_image" /><h2 style="margin-bottom: 11px;">Why does automatic investing work?</h2><p>In essence, this strategy has historically worked because you're only human, and an automatic investment program is not. You might make a mistake, such as forgetting to reinvest a dividend, or buying too high and selling too low. An automated system, such as a robo advisor, can automatically rebalance your account, selling investments that are too large and buying investments that have become too small.</p><p>For instance, if you originally set your 401(k) contributions to 70% stocks and 30% bonds, you might find after a year that your account looks more like 75% stocks and 25% bonds. If you've set everything to automatically rebalance, your portfolio will do just that, selling some stocks and buying some bonds to get the allocation back to your original settings. (Of course, changing your portfolio always brings the natural market risk of losses or gains to your investments.)</p><p>Granted, it's not as exciting as it might be to pick the next hot stock to explode or to buy a million-dollar winning lottery ticket, but it can be a "get rich slowly" process that has historically worked for many people. Another plus is that, eventually, you may not even miss the amounts you're routinely setting aside for retirement. "It may be difficult to get started to save and invest," says Yao, "but once you have done it for a while, it becomes a new normal and you get used to it fairly quickly." In fact, you could say it'll become automatic.</p><p> </p><p><em>— With additional reporting from Geoff Williams and the Life and Money by Citi editors.</em></p>